LONDON, March 11 (Reuters) - German shares rose on Tuesday, outperforming European stocks more broadly, as strong trade data from the region’s largest economy revived investor appetite for the DAX index.

Wider market sentiment was still undermined by the crisis in Ukraine, where confrontation between Kiev and Moscow showed no sign of easing.

The DAX had fallen 2.9 percent in the previous two sessions, dragged down by worries about Ukraine and by disappointing Chinese trade data.

“The German trade figures were very solid and do point to a continuing recovery combined with an acceleration in growth in 2014,” said Markus Huber, a senior sales trader at Peregrine & Black. “Much will depend (on) how long the crisis in the Ukraine will drag on and if harmful sanctions and counter-sanctions will be put in place.”

Russia’s intervention in Crimea has led to plans for a referendum on March 16 on whether to secede from Ukraine and join Russia. Those plans have provoked condemnation from Western countries and the threat of international sanctions against Russia.

“Apart from obviously the eastern European markets reacting (to the tensions in Ukraine), we’ve not seen peripheral credit markets in Europe doing anything untowards ... which is important for the European banking system,” she said.

She noted that the fact any stock market weakness has been relatively short-lived hints at underlying optimism that equities will grind higher in 2014, though she advocates a selective investment approach.

“In the long term we think Europe is on track ... but in the very short term we have come a long way very quickly and while we’re still slightly overweight European equities, we’re taking a much closer look at that overweight.”

In a global context, Ashburton favours European-listed pharmaceutical stocks including Novartis, Roche , and Sanofi on valuation grounds over their U.S. counterparts.

UNICREDIT SOARS

Italy’s FTSE MIB was up 0.4 percent after briefly hitting a high not seen since mid 2011, led by UniCredit after the bank reported a large 2013 net loss due to writedowns of goodwill and bad loans but ruled out any need of a capital increase.

UniCredit jumped 6.2 percent in robust volume - at 3-1/2 times its 90-day daily average against a more modest 1-1/2 times seen on the FTSE MIB. Unicredit added the most points to the Italian benchmark by some margin.

The FTSE MIB has risen 1 percent this week, also helped by upbeat Italian industrial production data released on Monday, which fuelled investor optimism that economies in southern Europe were starting to recover.

Strategists at Credit Suisse reckon the rally in peripheral Europe has further to run.

“Peripheral European equities can outperform core Europe by about 20 percent, based on projected GDP growth differentials,” they said in a note. “We continue to be overweight Italy.”